Feb. 13, 2020
Only a few decades ago, top economists were fretting over the possibility of running out of oil. Now, a new peak oil is fast approaching: peak demand. Global oil demand is slowing, and industry analysts project global demand to plateau and fall within the next decade and a half.
For the U.S., oil dependence has rapidly turned into abundance in less than a decade, thanks to the advent of cheap shale oil and increases in fuel efficiency. In September 2019, the U.S. exported more petroleum products than it imported. The U.S. Energy Information Administration projects that in 2020 the U.S. will be a net exporter of oil for the first time since 1948.
Meanwhile, the world is waking up to the crisis of climate change. United Nations scientists report that the world must stop adding carbon dioxide to the atmosphere within the next 30-50 years to avoid catastrophic impacts of climate change. The world must eliminate all but the most essential use of oil and other fossil fuels, or face rising seas, super-sized hurricanes, and food-insecurity leading to mass migration and unrest. Global temperatures have already risen 1ºC, threatening runaway change as melting arctic soils and wildfires release greater levels of climate warming gasses into the atmosphere.
Even if we overshoot this target, cost reductions in renewable energy and social pressure from mounting climate impacts are likely to undermine markets, leading to an overabundance of supply, and turning fossil fuel investments from assets into liabilities. Meanwhile, new minerals are rising as critical resources for the 21st century economy.